NBER Working Papers and Publications

We study the effects of corporate taxes on income inequality. Using state corporate taxes as a setting, we provide evidence that corporate tax cuts lead to increases in income inequality. This result is robust across regression, matching, and synthetic controls approaches, and to controlling for a host of potential confounders. We use Statistics of Income data from the IRS to explore mechanisms behind this result. We find tax cuts lead to higher income for both top and bottom earners, but the gains to capital income for top earners exceed the gains to total income for bottom earners. This result suggests that, while all earners appear to benefit from a corporate tax cut, the relation between tax cuts and inequality is positive, in part, because high income individuals shift their compensat...

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New NBER affiliates are appointed through a highly competitive process that begins with a call for nominations in January. Candidates are evaluated based on their research records and their capacity to contribute to the NBER's activities by program directors and steering committees. New affiliates must hold primary academic appointments in North America. On January 1, 2020, there were 1,581 NBER-affiliated researchers based at 180 institutions.